On Friday October 3rd, President Bush signed into law the Emergency Economic Stabilization Act of 2008. In order for the bill to make it through Congress, however, a number of provisions beyond the $700 billion intervention were added to garner the needed votes. The Energy Improvement and Extension Act of 2008 was one of these “sweeteners” and employs tax incentives to spur the development and deployment of renewable energy, energy efficiency, advanced coal technology, and biofuels. More specifically, the bill does the following:

  • Extends the production tax credit for wind energy through 2009.
  • Extends the production tax credit for biomass, geothermal, solar, landfill gas, trash combustion, and hydropower energy through 2010.
    • Makes biomass facility expansions “qualified” so that expansions qualify for the production tax credit.
  • Extends the investment tax credit for solar energy and fuel-cells through 2016.
  • Creates a production tax credit for marine and hydrokinetic energy, which includes wave energy, tidal energy, free flow water energy, and ocean thermal transfer energy.
  • Expands the investment tax credit for advanced coal technologies to an aggregate of $2.55 billion, of which $800 million is dedicated to IGCC and $1.75 billion is dedicated to other advanced coal technologies.
    • Advanced coal technology includes technology that “separates and sequesters” at least 65 percent of a facility’s total carbon dioxide emissions.
    • For the IGCC portion of the tax credits, the highest priority is given to CCS projects.
    • Provides additional tax credits for coal gasification and CCS deployment and dedicates $250 billion of the additional tax credits to CCS.
  • Creates a tax credit for carbon dioxide actually captured and stored in the United States.
    • The credit for pure-CCS is $20 per metric ton of carbon dioxide stored.
    • The credit for storage associated with an EOR or EGR project is $10 per metric ton of carbon dioxide stored.
    • The tax credit goes to the facility capturing the carbon dioxide.
    • To be eligible, the facility must capture at least 500,000 metric tons of carbon dioxide per year.
    • The credit will be available until 75,000,000 million tons of carbon dioxide have been stored.
    • Pure-CCS is characterized as disposal.
  • Expands the definition of facility that qualifies for accelerated depreciation as a cellulosic biofuel facility.
  • Doubles the tax credit to $1.00 per gallon for biodiesel and renewable diesel used or sold commercially.
  • Includes coal derived liquid fuels in the alternative fuel credit scheme if the coal derived liquid fuels are manufactured at a coal gasification facility that captures and stores a certain portion of its carbon dioxide emissions.
  • Provides a tax credit of up to $4,000 for taxpayer investments in wind energy and geothermal heat pump infrastructure to be used at the taxpayer’s dwelling.
  • Authorizes tax credits for up to $800,000,000 million in renewable energy bonds, which may be issued by state and local governments, energy production companies, and energy cooperatives.